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1/9/2013
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CES 2013: Apple Shadow Looms Large

Apple isn't attending CES, but that doesn't stop reports of a larger, cheaper iPhone from stealing some of the tech show's spotlight.

CES 2013: 7 Standout Technologies
CES 2013: 7 Standout Technologies
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Apple is not attending the Consumer Electronics Show, but that didn't stop it from making headlines this week with several reports suggesting the company will release a cheaper iPhone by the end of the year.

Citing people familiar with Apple's plans, The Wall Street Journal reported that a less expensive iPhone is being tested with cheaper materials to reduce the price. The Journal said that such an iPhone might drop the aluminum shell of the iPhone 5 and replace it with a polycarbonate (i.e., plastic) body.

Device manufacturer Foxconn has complained that the iPhone 5's body is difficult to manufacture. Plastics would presumably be easier to work with and less costly. Other parts and components of the device would remain similar, and Apple may even recycle materials from older, discarded iPhones.

Why would Apple, a company that prides itself on high-end gear, want to make a lower-cost iPhone? The same reason it made the iPad Mini. Lower cost products sell in higher volumes.

[ Take a look at some of the new handsets we'll see this week at CES. See CES 2013: New Smartphones On Deck. ]

The iPhone 5 costs a whopping $649 when sold without a contract. That's for the 16 GB model, mind you. The 64 GB model costs $849. Carrier subsidies reduce the price to something more palatable, like $199 for the 16 GB iPhone 5 with a carrier contract. But not all carriers offer contracts.

Walmart's Straight Talk prepaid service this week announced its own plans to sell the iPhone 5 without a contract. It will charge the full retail price for the device, $649. That's a lot of money to drop on a piece of hardware. Straight Talk doesn't subsidize devices, though it offers to finance purchases of the iPhone 5 through a Walmart credit card. A lower cost iPhone would be easier for Straight Talk to sell to its customers, even when charging full price for it.

So how much would this cheaper iPhone cost? Bloomberg chimed in to suggest the cost would be between $99 and $149 without carrier subsidies.

The iPhone's appeal has slipped in the last two years as Android has taken over the smartphone market. The sheer volume of Android smartphones, ranging from small and cheap to large and costly, has pushed the iPhone aside. Consider the number of smartphones announced at CES this week. New models from Huawei, Sony, ZTE and other OEMs will find their way to retail stores and consumers' pockets quickly. Why? They have larger screens, better cameras and offer a greater variety of features.

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melgross
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melgross,
User Rank: Ninja
1/10/2013 | 12:59:56 PM
re: CES 2013: Apple Shadow Looms Large
This isn't entirely true. First if all, a price of $99-$149 isn't possible by merely substituting polycarbonate and some older parts. $350 might be a more attainable goal if performance could remain at older levels.

Secondly, the iPhone has been gaining marketshare around the world. When Apple and China Mobile come to an agreement, then iPhone marketshare will rise more. In the USA, the iPhone is at least half of all smartphone sales, going by the sales from the carriers. Once T-Mobile begins to officially sell them, those numbers will rise too.

But it's true that in third world countries such as India, Indonesia, China, Brazil and others, a cheaper phone is needed. But it shouldn't compete with the cheapest, as that isn't Apple's reputation. If they come up with a medium priced model at that $350 point, it should suffice.
stevew928
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stevew928,
User Rank: Strategist
1/12/2013 | 6:11:58 PM
re: CES 2013: Apple Shadow Looms Large
Baloney! IF Apple would make such a move, I'd know it's the beginning of the end. It's more likely, this is what some of the "industry experts" THINK Apple should be doing... as they have now for decades... and Apple would have been gone if they had followed this foolish "advice" over the years.

The big thing about the iPad mini is the form factor, not the price. If people want cheap, they buy an Android tablet (which then often ends up in the gadget shoe box after the novelty wears off). And, no, the iPhone's appeal hasn't slipped. Take a look at mobile browser statistics someday. Android is 'outselling' because it's now included on any random piece of junk and probably even some refrigerators. It's a 'who cares' kind of thing.

Yes, I'm sure Apple wants to tap into those markets, but that's not the way.
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